TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

Thursday, April 21, 2016

The IRS Scandal, Day 1078

IRS Logo 2The Daily Signal, Jason Chaffetz Wants to Use ‘Atrophied’ Muscle of Impeachment Against IRS Commissioner:

The chairman of the House Oversight and Government Reform Committee wants Congress to impeach wayward government agents more often, and he’d like GOP leadership to start with Commissioner of Internal Revenue John Koskinen.

In an interview with The Daily Signal, Rep. Jason Chaffetz, R-Utah, likened impeachment “to a muscle that has atrophied over time,” and said he wants to “Get that muscle working again—this should be a common occurrence, this shouldn’t be once in a century.”

Chaffetz believes impeachment is within Congress’ Constitutional authority. “This was the safety valve,” he explained, “for somebody who’s not serving the best interest of the United States of America.”

Congress has only impeached

More recently Chaffetz has led the charge to impeach Koskinen, saying he obstructed the congressional investigation into the agency’s targeting of conservative groups. Chaffetz drew up impeachment articles for the taxman last October and directed his staff to hand deliver the papers to each member of Congress. Last year, the Treasury Department issued a statement backing Koskinen, saying that “Commissioner Koskinen is a man of the highest integrity with a steadfast commitment to public service during difficult times,” per the Associated Press.

But so far, House Speaker Paul Ryan, R-Wis., has hesitated to give Koskinen the boot. At a press conference last week, Ryan told reporters he’d rather wait until after the election to fire the top tax agent.

There’s always an election,” Chaffetz said, expressing frustration with Ryan’s decision to punt on the issue.

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April 21, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Wednesday, April 20, 2016

The IRS Scandal, Day 1077

IRS Logo 2Townhall op-ed:  Dealing with the IRS Doesn’t Have to Be Hell, by Reps. Kevin McCarthy, Jason Smith, Rick Allen, Kristi Noem, David Rouzer & Glenn Grothman:

[H]ow do we plan to make the IRS more accountable? We have six bills we plan to pass next week.

The first will require the IRS to crack down on their employees who are delinquent on their own taxes. ...

Next, we will consider legislation that creates something that should already exist—a statutory rule blocking the IRS from rehiring employees who were already fired from the IRS for misconduct. ...

Following that, the House plans to pass a proposal that addresses the IRS’s shoddy customer service record in responding to requests for help in preparing tax forms. During some tax-filing seasons, the IRS only answers one in ten calls from taxpayers. This bill will ban IRS employees from getting bonus payments until the agency implements a plan to bring customer service performance levels up to what we expect of customer service in the private sector.

We also have a bill to prevent the IRS from keeping user fees they charge in a slush fund that is neither transparent nor accountable. ...

Lastly, we will be passing two bills that we expect to have wide bipartisan support: the first to stop any IRS funding from being used to target citizens for exercising their First Amendment rights, and the next to provide printed copies whenever requested of the official IRS instructions book on how to file taxes, ensuring those with limited or no Internet access still have everything they need to deal with April 15th.

In the week following Tax Day, House Republicans will send a clear message to the IRS: clean up your act, because this is only the beginning. Accountability isn’t an option in government; it’s a necessity. Only with a thoroughly reformed IRS and eventually a simplified and fair tax code can taxpayers again trust that the government is not only working efficiently, but is working for them.

Then, while we can’t promise that paying taxes will be a good experience, at the very least it won’t feel like being stuck in hell.

Office of Management and Budget, Statement of Administration Policy (Apr. 18, 2016):

The Administration opposes H.R. 1206, the No Hires for the Delinquent IRS Act; H.R. 4890, the IRS Bonuses Tied to Measurable Metrics Act; and H.R. 3724, the Ensuring Integrity in the IRS Workforce Act of 2015. These bills would impose unnecessary constraints on the Internal Revenue Service's (IRS) operations without improving the agency's ability to administer the tax code and serve taxpayers.

H.R. 1206 would prohibit the IRS from hiring any new employees until the Secretary of the Treasury certifies that no IRS employee has a seriously delinquent debt, or provides a report to the Congress that includes an explanation of why certification is not possible and what would be required to provide such a certification. The bill could result in the IRS being prohibited from hiring any new employees for any purpose -- a drastic and counterproductive step that would compromise tax administration and taxpayer services. The bill is also unworkable in operation, as "seriously delinquent" debts could be as low as $1 and tax liens are recorded on a case-by-case basis. This legislation is unnecessary, as strong laws and procedures already exist to ensure that IRS employees comply with their tax obligations. Publicly-available data show that IRS employees are among the most tax compliant groups in the Nation with a delinquency rate of less than 1 percent.

H.R. 4890 would ban performance awards to IRS employees until the Secretary of the Treasury develops and implements a comprehensive customer service strategy. This bill is unnecessary, as the IRS has already developed and has begun to execute a strategy to improve taxpayer services. The real constraint on the IRS's ability to serve taxpayers effectively is severe underfunding, including for taxpayer services. IRS funding is more than $900 million below its 2010 level, before adjusting for inflation. These budget cuts have impeded the IRS's ability to serve taxpayers, including inadequate responses to taxpayer calls and correspondence. Filing season statistics show that taxpayer service has improved this year as a result of a small funding increase provided last year, but more resources are needed to serve all taxpayers effectively and efficiently. Legislation constraining the IRS's ability to retain and recruit highly qualified employees is not needed and could be counterproductive to the Service's mission.

H.R. 3724 would prohibit the IRS from rehiring any employee who was involuntarily separated due to misconduct. The bill as written could force the immediate termination of employees who had been terminated and rehired many years ago, even if their performance since rehiring has been blemish-free. The bill's prohibition is also unnecessary because current IRS processes already ensure the agency does not rehire former employees who had significant conduct or performance problems during prior employment with the agency.

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April 20, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Tuesday, April 19, 2016

The IRS Scandal, Day 1076

IRS Logo 2The Blaze, White House Responds to House GOP Calls to Impeach IRS Commissioner:

President Barack Obama has full confidence in Internal Revenue Service Commissioner John Koskinen, even as House Republicans are calling for his impeachment over failing to comply with congressional subpoenas.

“Of course he does” have confidence in Koskinen, White House press secretary Josh Earnest told TheBlaze Monday.

Last week, a group of House Republicans went to the House floor to call for Koskinen’s impeachment. Last year, Republicans on the House Oversight and Government Reform Committee called for charges against the commissioner.

Republicans say Koskinen also failed to testify truthfully and failed to make congressional investigators aware evidence was missing as part of the probe into the IRS targeting of Tea Party and conservative groups — which first came to light in 2013.

Still, Earnest scoffed at the notion of impeachment: “It is ridiculous for Republicans in Congress who seek to gut funding for the IRS, in some cases they call for the outright abolition of the agency, to be a fair arbiter of the effectiveness of the IRS commissioner.”

“The fact is, Mr. Koskinen has an extraordinarily difficult job, and it’s made only more difficult because Republicans seek to cut the funding of the agency,” Earnest continued. “He is someone who undertakes that work with a lot of professionalism and seriousness of purpose, and he deserves our gratitude.”

Breitbart, White House: Republican Calls For IRS Commissioner To Resign ‘Ridiculous’

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April 19, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Monday, April 18, 2016

FiveThirtyEight:  Everyone Files Their Taxes At The Last Minute

538 (2015)FiveThirtyEight, Everyone Files Their Taxes At The Last Minute:

Americans are a nation of procrastinators. Our tax returns prove it.

Last year, 21.5 million Americans waited until the last minute – or at least the last week – to submit their tax returns. That’s roughly one in seven filers, according to data from the Internal Revenue Service.

538-2

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April 18, 2016 in IRS News, Tax | Permalink | Comments (2)

The IRS Scandal, Day 1075

IRS Logo 2Utah Policy, Ryan, Chaffetz Part Ways over Impeachment of IRS Chief:

Reps. Paul Ryan and Jason Chaffetz both believe IRS Commissioner John Koskinen should be fired, but they disagree about the timing. Chaffetz wants to remove Koskinen now, while Ryan says the GOP must win the White House first.

Reports Roll Call:

Oversight Committee Chairman Jason Chaffetz, R-Utah, with support from a majority of Republicans on his panel, introduced a resolution in October to impeach Koskinen. “The framers [of the Constitution] gave us a safety valve to get rid of somebody who is not serving the best interest of the nation and clearly John Koskinen is not,” Chaffetz said in a brief interview Thursday. “His record is clear and he should be removed from office.”

The resolution argues that Koskinen failed to comply with a subpoena requesting certain IRS documents and that he provided false and misleading information to Congress about missing emails sent to and from former IRS official Lois Lerner, a lead figure in the targeting scandal. The Judiciary Committee, which has jurisdiction over impeachments, has not acted on the resolution.

Lerner, the former head of the IRS tax-exempt organizations division, retired from the agency in September 2013. She had been on administrative leave since May 2013 after she revealed during a tax conference that the agency had inappropriately used political terms like “Tea Party” to filter tax-exemption applications for extra scrutiny.

The IRS has said it disputes the resolution's allegations and that it has cooperated with congressional investigations.

Chaffetz said he is working to build broad support for his resolution, which currently has 62 Republican co-sponsors. “It hasn’t been done in 140 years to impeach a civil officer,” Chaffetz said when asked about resistance from colleagues to support the effort. “But we think we’re on firm ground. It is in the Constitution.”

As to Ryan’s idea of waiting for Republicans to win the White House, Chaffetz said, “That’s one path, but I want the bureaucracy to know that if they do something as reprehensible as destroying documents there is an action that Congress can take.”

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April 18, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Sunday, April 17, 2016

The IRS Scandal, Day 1074

IRS Logo 2Investor's Business Daily editorial, Storming The IRS Gates: An Occupy Movement Worth Supporting:

A federal judge says the IRS can’t be trusted. Well, he’s right. So when will people in this country finally rise up and force Washington to get rid of this awful agency?

Because a holiday called Emancipation Day was celebrated Friday in the capital district, Americans have a few extra days to file their taxes this year. But the IRS remains, as does its institutionalized abuse of taxpayers. There is no emancipation from the torment of taxation, nor the agents of its collection, on the horizon.

Americans need relief, however. Taxes eat away at our substance, and the IRS makes this all the more intolerable because it decided long ago to be a wedge of enmity between a growing federal government and an ostensibly free people. This strained relationship has deteriorated to the point that the IRS targeted for persecution groups and individuals that it doesn’t like. Organizations that identified as Tea Party and conservative were harassed to the point that some of the victims decided to sue.

It’s hard to be upbeat on April 15, even when tax filing day is delayed. Yet there is a scintilla of hope to be found when a federal official rightly characterizes the IRS as an institution whose word is of little value.

“It’s hard to find the IRS to be an agency we can trust,” Judge David B. Sentelle of the U.S. Court of Appeals for the D.C. Circuit, said Thursday during oral arguments in one of the lawsuits filed against the tax collector in the targeting scandal.

The Washington Times reported that during the hearing Sentelle “said there is strong evidence that the IRS violated the constitutional rights of the groups when it delayed their nonprofit status applications and asked inappropriate questions about their political beliefs.”

What’s more, there’s good reason to think that the mistreatment of Tea Party and right-of-center groups has never stopped.

This should deeply concern us all, even those who aren’t Tea Party supporters. The IRS is not a political arm of the government that’s free to be used to suppress to dissenters. It is merely a tax collector.

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April 17, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (6)

Saturday, April 16, 2016

Rebranding The IRS: 'Fueling America'

Bloomberg, Would You Like the IRS If It Looked Like This? We Invited Three Top Design Firms to Give the Tax Agency a New Public Face. Here Are Their Rebrands.

It's hard to think of a government agency as disliked as the IRS. In a recent poll, 12 percent of taxpayers said they liked Vladimir Putin better. Beyond the Internal Revenue Service itself, many Americans hate the whole idea of paying taxes. Twenty-seven percent of those polled said they would get an IRS tattoo if it meant a tax-free future. Eleven percent would clean the toilets at Chipotle.

And it's impossible to imagine the IRS ever changing its image.

Or is it?

We asked three leading global design and brand strategy firms—Base Design, Chermayeff & Geismar & Haviv, and Siegel+Gale—to do just that. Here's what they came up with.

My favorite:  The IRS: Fueling America:

Fueling

Another good one:

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April 16, 2016 in IRS News, Tax | Permalink | Comments (2)

The IRS Scandal, Day 1073

IRS Logo 2The Daily Signal, Conservatives Renew Campaign to Impeach IRS Commissioner:

In time for tax season, members of the Freedom Caucus are calling on House Speaker Paul Ryan, R-Wis., and Judiciary Committee Chairman Bob Goodlatte, R-Va., to deliver the head of IRS Commissioner John Koskinen on a political platter.

As most of Congress heads out of town for the weekend, a handful of members filed onto the House floor Thursday evening and renewed an effort to impeach the nation’s top taxman.

They argued that the IRS infringed on free speech when they unfairly targeted conservative groups and they blamed Koskinen for obstructing a congressional investigation into the agency’s conduct. ..

The move comes just four days before the April 18 deadline to file individual tax returns. That timing was intentional, Jordan said. His group designed the move to spotlight issue during a week when “American are dealing with the IRS in an up close and personal way.”

Already written up, the impeachment articles remain mired in committee. And while conservatives can exert political pressure by rallying public opinion, they can’t technically advance the process.

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April 16, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Friday, April 15, 2016

GAO:  Two-Thirds Of All Active Corporations Paid Zero Federal Income Tax

GAO (2016)Government Accountability Office, Most Large Profitable U.S. Corporations Paid Tax but Effective Tax Rates Differed Significantly from the Statutory Rate (GAO-16-363):

In each year from 2006 to 2012, at least two-thirds of all active corporations had no federal income tax liability. Larger corporations were more likely to owe tax. Among large corporations (generally those with at least $10 million in assets) less than half—42.3 percent—paid no federal income tax in 2012. Of those large corporations whose financial statements reported a profit, 19.5 percent paid no federal income tax that year. Reasons why even profitable corporations may have paid no federal tax in a given year include the use of tax deductions for losses carried forward from prior years and tax incentives, such as depreciation allowances that are more generous in the federal tax code than those allowed for financial accounting purposes. Corporations that did have a federal corporate income tax liability for tax year 2012 owed $267.5 billion.

GAO

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April 15, 2016 in Gov't Reports, IRS News, Tax | Permalink | Comments (2)

The IRS Scandal, Day 1072

IRS Logo 2Washington Times, Federal Judge Calls IRS Untrustworthy in Tea Party Case:

A federal judge said the IRS isn’t to be trusted as he and his colleagues tried Thursday to figure out whether the tax agency is still targeting tea party groups for intrusive and illegal scrutiny.

Judge David B. Sentelle of the U.S. Court of Appeals for the D.C. Circuit said there is strong evidence that the IRS violated the constitutional rights of the groups when it delayed their nonprofit status applications and asked inappropriate questions about their political beliefs.

The agency’s insistence that it has retrained employees and instructed managers to behave better did not mollify the judges, who said past IRS behavior doesn’t lend itself to the benefit of the doubt.

“It’s hard to find the IRS to be an agency we can trust,” Judge Sentelle said.

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April 15, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Thursday, April 14, 2016

IRS Admits It Encourages Illegals To Steal Social Security Numbers To Get Tax Refunds

IRS Logo 2Forbes:  IRS Admits It Encourages Illegals To Steal Social Security Numbers For Taxes, by Robert W. Wood:

This isn’t exactly the kind of story the IRS wants buzzing around at tax time. The IRS and Justice Department normally want ‘scared straight’ stories just before Tax Day. Ideally, when an indictment or conviction for tax evasion hits the news, it makes you think twice. Somehow, you think just a bit more about all those deductions, or if you really reported all your income, before you sign your return under penalties of perjury.

Instead, we have the top dog at the IRS, the IRS Commissioner himself, admitting that, well, there’s a problem with illegal immigrants and taxes. In fact, the top IRS official this time wasn’t talking about how the IRS wipes some hard drives or can’t find emails. He wasn’t even asking for a bigger budget to give bonuses to IRS employees.

This time, he was talking about illegal immigrants, and about the IRS turning a blind eye. Or maybe worse. The IRS actually wants illegal immigrants to illegally use Social Security numbers, he suggested.

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April 14, 2016 in IRS News, Tax | Permalink | Comments (8)

The IRS Scandal, Day 1071

IRS Logo 2Washington Times, IRS Must Publicize Sensitive Tea Party Data Obtained in Targeting, Obama Administration Says:

The IRS says it has stopped targeting the tea party — but three years later, the tax agency is still holding on to the sensitive information it pried from the conservative groups through invasive questions, and officials are even vowing to make the answers public.

Groups caught up in the scandal say that is proof the targeting is continuing, and they want the IRS to expunge the information or, at the very least, to make sure it is never released.

Obama administration officials insist they have stopped targeting but say the groups are at fault for following the misguided IRS requests for information. Now, the administration says, there is nothing the tax agency can do but make the information public as the law requires.

On Thursday, a federal appeals court in Washington will be asked to referee the dispute, just one of the legal problems still plaguing the IRS after its 2013 admission that it inappropriately singled out conservative and tea party groups for intrusive scrutiny.

“They asked for things to which they were not entitled,” said Cleta Mitchell, an attorney for True the Vote, one of the tea party nonprofits that got caught up in the targeting scandal. “This is the fruit of the poisonous tree.”

The IRS acknowledged that the questions it asked were inappropriate and weren’t needed to decide on tea party groups’ applications for nonprofit status.

Questions included such sensitive information as the names of all financial contributors; lists of family members, details of their political affiliations and speculation about their plans to run for office; and details of organization members’ outside jobs.

Groups were even told that they must detail members’ private communications with their local legislators or any contact with reporters.

Tea party groups said the questions trampled on their First Amendment rights to freedom of speech and association.

Some tea party organizations, advised by their attorneys, refused to comply. Others figured that the IRS had the upper hand, so they turned over the information despite misgivings.

The IRS has apologized for the intrusive questions but still holds on to the information it gleaned from dozens of tea party groups from 2010 through 2013.

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April 14, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Wednesday, April 13, 2016

The IRS Scandal, Day 1070

IRS Logo 2American Center for Law and Justice, Free Speech Appellate Court’s Blistering Takedown of IRS, DOJ over Targeting Conservatives is Awe-Inspiring:

It’s one of the most stunning judicial opinions I’ve ever read.  It is as clear in its scathing retort of the Obama Administration’s IRS and DOJ as it is precise in its legal acumen.

In what can only be described as a judicial takedown, the Sixth Circuit Court of Appeals unanimously delivers a scorching rejoinder to the IRS and DOJ’s brazen refusal to comply with a federal judge (even calling into question whether the Department of Justice is even seeking to provide “justice”) in one of the ongoing federal lawsuits over the IRS targeting scandal.

What you are about to read (and if you have the time, the entire opinion is well worth reading) is the opening salvo – a line drawn in the sand – by the federal judiciary against the out-of-control, politically corrupt IRS and DOJ:

Among the most serious allegations a federal court can address are that an Executive agency has targeted citizens for mistreatment based on their political views. No citizen—Republican or Democrat, socialist or libertarian—should be targeted or even have to fear being targeted on those grounds. Yet those are the grounds on which the plaintiffs allege they were mistreated by the IRS here. The allegations are substantial: most are drawn from findings made by the Treasury Department’s own Inspector General for Tax Administration. Those findings include that the IRS used political criteria to round up applications for tax-exempt status filed by so-called tea-party groups; that the IRS often took four times as long to process tea-party applications as other applications; and that the IRS served tea-party applicants with crushing demands for what the Inspector General called “unnecessary information.”

Yet in this lawsuit the IRS has only compounded the conduct that gave rise to it. The plaintiffs seek damages on behalf of themselves and other groups whose applications the IRS treated in the manner described by the Inspector General. The lawsuit has progressed as slowly as the underlying applications themselves: at every turn the IRS has resisted the plaintiffs’ requests for information regarding the IRS’s treatment of the plaintiff class, eventually to the open frustration of the district court. At issue here are IRS “Be On the Lookout” lists of organizations allegedly targeted for unfavorable treatment because of their political beliefs. Those organizations in turn make up the plaintiff class. The district court ordered production of those lists, and did so again over an IRS motion to reconsider. Yet, almost a year later, the IRS still has not complied with the court’s orders. Instead the IRS now seeks from this court a writ of mandamus, an extraordinary remedy reserved to correct only the clearest abuses of power by a district court. We deny the petition.

The entire opinion is a blistering exposition of the IRS’s intractable refusal to comply with not only the law but the federal courts as well.

The Sixth Circuit highlights this mind-blowing statement from the federal district judge in this case (and yes what you are about to read is extraordinarily rare from a federal judge):

My impression is the government probably did something wrong in this case. Whether there’s liability or not is a legal question. However, I feel like the government is doing everything it possibly can to make this as complicated as it possibly can, to last as long as it possibly can, so that by the time there is a result, nobody is going to care except the plaintiffs. . . . I question whether or not the Department of Justice is doing justice.

That statement, from a federal judge no less, cuts directly to the core of the IRS targeting scandal itself.  The Obama Administration’s IRS attempted to shutdown and silence conservative groups.  When it was caught, it attempted to stonewall and drag its heels with Congress.  Now it is trying to evade the reach of the federal courts.  It’s astonishing

But what the IRS did next was even more brazenly astounding.  It filed a writ of mandamus, which is reserved for “‘exceptional circumstances’ involving a ‘judicial usurpation of power’ or a ‘clear abuse of discretion.’”

That’s right, the IRS accused a federal district judge of usurping its power, merely by requiring the IRS to provide simple information about the names of the IRS officials involved in the IRS targeting and a list of the groups targeted – a simple, legally required step in a class action lawsuit.

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April 13, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Tuesday, April 12, 2016

The IRS Scandal, Day 1069

IRS Logo 2Politico, The Ghost of Lois Lerner:

Probably the biggest news to come out Sunday was President Barack Obama’s defense of Democratic frontrunner Hillary Clinton’s handling of classified information while secretary of State on “Fox News Sunday” — and his assertion that Clinton won’t get any special treatment from a Justice Department investigation. Well, you probably have a decent idea of how conservative commentators Karl Rove and George Will responded to that notion.

“In the midst of what was supposed to be a Justice Department investigation of Lois Lerner and the IRS, and the president said prejudging the whole process, there is not a smidgeon of evidence of a scandal at the IRS,” Will said. “Now, we know that the Justice Department investigation was a sham. It was part of the cover-up. They gave the investigation to an Obama contributor working in the Justice Department.” (Both Democrats and the Justice Department found that the IRS handled tea party applications incompetently, but without “criminal intent,” as Justice put it.)

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April 12, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Monday, April 11, 2016

The IRS Scandal, Day 1068

IRS Logo 2Patriot Post, IRS Meets Some Justice:

The Internal Revenue Service long has been exposed in its overtly political and sleazy maneuvering, but little has been done thus far to hold rogue bureaucrats to account. Fortunately, the Sixth Circuit Court of Appeals took a step toward halting the deny-delay-and-destroy tactics of this government agency. ...

For just shy of three years, Barack Obama’s weaponized tax-collecting agency has fought to hide data being sought by conservative groups the IRS targeted in the 2012 election cycle. Specifically, the IRS petitioned for a writ of mandamus to block the discovery efforts of the plaintiffs.

But the Sixth Circuit has ordered that the taxpayer-funded agency immediately turn over requested information about its activity. Writing for the unanimous three-judge appellate panel, Judge Raymond Kethledge noted that mandamus is “an extraordinary remedy reserved to correct only the clearest abuses of power by a district court.” In other words, the offense was greeted with a flat denial of the IRS’s petition.

The Court’s response begins: “Among the most serious allegations a federal court can address are that an executive agency has targeted citizens for mistreatment based on their political views. No citizen — Republican or Democrat, socialist or libertarian — should be targeted or even have to fear being targeted on those grounds. Yet those are the grounds on which the plaintiffs allege they were mistreated by the IRS here. The allegations are substantial: most are drawn from findings made by the Treasury Department’s own Inspector General for Tax Administration.”

The Cincinnati-based three-judge appeals panel charged with this matter has lost patience with the legal representation of the IRS. And who represents the IRS in this lawsuit that’s clearly being avoided only through the lack of cooperation? None other than the Obama Justice Department.

Judge Kethledge authored the decision and wrote that the Justice Dept. lawyers “have a long and storied tradition of defending the nation’s interests and enforcing its laws — all of them, not just selective ones — in a manner worthy of the Department’s name. The conduct of the IRS’s attorneys in the district court falls outside that tradition. We expect that the IRS will do better going forward.”

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April 11, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Sunday, April 10, 2016

The IRS Scandal, Day 1067

Hackney Philip Hackney (LSU), Incorrect Claims About IRS Given Bullhorn on TaxProf:

Just a heads up that a story you posted on April 9, 2016 on the "IRS Scandal, Day 1066" entitled Renew America, Most Dangerous Year for Free Speech in U.S. History, by Bryan Fischer, contains incorrect information that appears to me to be a deliberate falsehood. It claims that the IRS denied the applications for tax-exempt status of 67 organizations last year. That is true. But it also claims that of those 67 denials, 57 were denials of "religious groups." I see a lot of bad information in the stories you post regarding the "IRS scandal," but this one jumped out at me as clearly wrong and likely to cause harm. 

Fischer based his claims on the Free Beacon story entitled IRS Denied Tax-Exempt Status to 57 Religious Groups in 2015. The IRS report from which the reporter derived her information is here. In Table 24 of that document the IRS states that it denied 57 501(c)(3) "religious, charitable and similar organizations" during the particular taxable period. In other words the denials the reporter claims were for strictly "religious groups" were denials for 501(c)(3) organizations generally. She just conveniently left off the other qualifiers from that report and that failure still shows up on TaxProf blog, in Fischer’s story, and in the headline to the reporter’s story.  

While from the information the reporter used, it might have been theoretically possible that all 57 were in fact "religious groups," a little bit of work would have shown that claim to be false. I located 42 of the 57 denials issued during the taxable period (technically 10/1/14 - 9/30/15) and listed them below. Only two of 42 denials I located were denials as to "religious groups." The reporter failed to do any work to track that down. Fischer repeated that falsehood and TaxProf Blog magnified that falsehood.

The author plays fast and loose with the facts in order to presumably inflame tensions on this issue. There are other issues with the article, but that one is the most egregious. Many of the stories you post from right wing or religious press contain such significant problems. Such lies have real world consequences on real people who work for the IRS. Such lies have deep implications for the administration of the tax system. I wish you would reconsider the publication of reporting that contains such deliberate falsehoods. Please consider posting corrections as other media outlets do when the facts are found to be incorrect. This one deserves a correction.

Thanks for hearing me out.

UPDATE: In what appears to be a modest modification of the story after I first sent you this letter, the reporter in the Free Beacon now claims: “The IRS rejected a total of 67 applications for tax-exempt status in 2015, and religious groups comprised the majority of denials.” This claim is still wrong for same reasons discussed above.

Denials in the relevant period that were on mundane EO matters such as helping kids, working with open source software, fundraising and stock racing cars: Denial 201452017, 201502017, 201503016, 201504017, 201505039, 201505042, 201507023, 201507026, 201505040, 201505041, 201507025, 201509039, 201510059, 201511024, 201514011, 201514013, 201516066, 201515037, 201517019, 201517008, 201519035, 201523021, 201525011, 201525012, 201525014, 201527043, 201529012, 201529013, 201533014, 201534020, 201535019, 201540016, 201540019, 201545030, 201545031, 201545028, 201545029, 201548021, 201548025, 20155004

RELIGIOUS GROUP Denial 201523022, 201526020 

Editor's note:  As I have repeatedly said:

“My goal [in covering the IRS Scandal is] to link to every single press report about the scandal – from both the right and the left. Because the right covers the scandal much more than the left, I have linked to many more stories from the right than from the left. Check out Day 883.”

I do not need to "consider posting corrections as other media outlets do when the facts are found to be incorrect" — my policy since Day 1 of my coverage has been to post all corrections and opposing views on TaxProf Blog.  Indeed, when Professor Hackney contacted me yesterday, I encouraged him (as I have done with others who have objected to particular posts) to write the response that appears above.

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April 10, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (7)

Saturday, April 9, 2016

The IRS Scandal, Day 1066

IRS Logo 2 Renew America, Most Dangerous Year for Free Speech in U.S. History:

President Obama loses his bully pulpit and billy club on January 20, 1017. That means he has less than nine months to destroy as much of the Constitution as he can, and "fundamentally transform" the United States into something the Founders would not recognize.

We've already seen what his IRS has done to squash the free speech of Tea Party groups, which probably gave him the 2012 election. Despite all the negative publicity and Lois Lerner's wretched invocation of the Fifth Amendment before Congress, the IRS continues to deny conservative groups at a prodigious clip and to leave other conservative groups twisting in the wind.

The IRS rejected a total of 67 tax-exempt status applications last year, and 57 of them were from religious groups. Another 5,681 applications were left in legal no-man's land, which has exactly the same effect as a flat-out denial.

Update:  See the response by Professor Philip Hackney (LSU) in The IRS Scandal, Day 1067 that the Renew America article linked to above "contains incorrect information that appears to me to be a deliberate falsehood."

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April 9, 2016 in IRS News, IRS Scandal | Permalink | Comments (7)

Friday, April 8, 2016

NY Times, WSJ Debate Obama Administration's New Anti-Inversion Rules

Treasury Department (2016)Following up on my previous posts (links below) on the Obama Administration's new anti-inversion rules:

New York Times editorial, A Corporate Tax Dodge Gets Harder:

Of course, instead of that straightforward approach, lawmakers, chiefly Republicans, have seized upon the wave of inversions as proof that corporate taxes are too high and must be cut. They say that the only real fix for inversions is a complete overhaul of the corporate tax code. But broad tax reform is pie-in-the-sky in today’s hyper-partisan Congress, and they know it. Their argument does nothing but avoid dealing with these gigantic tax-avoidance schemes.

The Treasury Department deserves credit for tackling the problem. But its regulatory powers, though powerful, are limited. Only Congress can fully stop inversions and the looting of the American corporate taxes.

New York Times op-ed: Free Pfizer! Why Inversions Are Good for the U.S., by Diana Furchtgott-Roth (Manhattan Institute):

Donald J. Trump wants to build a bricks-and-mortar wall to keep immigrants out of the United States. President Obama wants to build a virtual wall to keep companies from leaving. Neither is likely to work.

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April 8, 2016 in IRS News, Tax | Permalink | Comments (1)

Take A Big Gulp And Pay Your Taxes In Cash ... At 7-Eleven

711IRS2IR-2016-56, IRS Offers New Cash Payment Option (Apr. 6, 2016):

The Internal Revenue Service announced today a new payment option for individual taxpayers who need to pay their taxes with cash. In partnership with ACI Worldwide’s OfficialPayments.com and the PayNearMe Company, individuals can now make a payment without the need of a bank account or credit card at over 7,000 7-Eleven stores nationwide.

“We continue to look for new ways to provide services for our taxpayers. Taxpayers have many options to pay their tax bills by direct debit, a check or a credit card, but this provides a new way for people who can only pay their taxes in cash without having to travel to an IRS  Taxpayer Assistance Center," said IRS Commissioner John Koskinen.

Individuals wishing to take advantage of this payment option should visit the IRS.gov payments page, select the cash option in the other ways you can pay section and follow the instructions ...

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April 8, 2016 in IRS News, Tax | Permalink | Comments (2)

The IRS Scandal, Day 1065

IRS Logo 2 American Thinker, Should California AG Harris Be Investigated for Tax Code Violations?:

Following revelations that Richard Nixon used the IRS to target his “enemies” for tax audits, Congress amended the Internal Revenue Code to restrict access by federal and state government officials to federal tax return information. The post-Watergate reforms include civil and criminal penalties for inspection and disclosure of federal tax returns not expressly authorized for legitimate and expressly identified law enforcement purposes.

The tax code requires that an annual tax return be filed by charities and other nonprofit organizations -- IRS Form 990. Under Section 6104 of the tax code, those returns of charities and other nonprofits must be made available for public inspection. Now, many Forms 990 are even made available on public websites such as Guidestar.org. The tax code, however, treats the names and addresses of donors listed on those Form 990 Schedule B’s quite differently than any of the other information on that form. Information about donors remain subject to the Code’s strict confidentially provisions.

California attorney general Kamala Harris is the state’s top charity regulator, overseeing California’s Registry of Charitable Trusts. Ms. Harris has decided to bypass federal law expressly requiring her to obtain Schedule B information directly from the IRS on a case-by-case basis if she has a legitimate need for donor information to enforce her state’s charitable solicitation laws. Instead of abiding by federal law, she’s employing a dragnet method, demanding that all charities registering with her office submit their Schedule B donor lists to the Registry in order to solicit contributions from Californians.

Charities even outside the state that wish to communicate with potential supporters in California are first required to register with Harris’ office before they may ask Californians for contributions, giving Ms. Harris tremendous power over “national” nonprofit organizations. By demanding the donor lists of not only California-based charities, but all charities seeking support from Californians, she has extended her reach to violate the right of private association of donors and charities throughout the entire country.

People may wonder why federal confidentiality laws should apply to names and addresses of donors filed with the IRS on Schedule B of charities’ tax returns. In the 1950s, the Alabama attorney general wanted to disrupt the civil rights movement in his state by obtaining the names of financial supporters of the NAACP. The Supreme Court shut down his demands in the landmark case NAACP v. Alabama. The court said that forced disclosure to government officials of the NAACP’s financial backers and members would seriously harm the right of private association protected by the First Amendment.

These principles were the law of the land when Congress enacted the donor confidentiality provisions, and are reflected in the federal confidentiality laws helping to protect charities and their donors from abuse and intimidation by government officials.

Lois Lerner’s IRS was caught violating the tax code confidentiality laws when it disclosed donor names and addresses of the National Organization for Marriage to opponents of that nonprofit organization. In addition, IRS emails obtained under the Freedom of Information Act show Lerner’s IRS gave the Federal Election Commission “detailed, confidential information concerning the tax exempt application status and returns of conservative groups” in violation of the tax code’s confidentiality laws. The tax code’s penalties applicable to acquisition, inspection, and disclosure of charities’ confidential federal tax return information applies to state officials.

Ms. Harris’ actions make a statement that she believes she is above the rule of law, and she’s willing to use the heavy hand of her office to abuse Americans’ right to private association. The Obama Justice Department has given many passes to lawbreaking by government officials who are political allies, and the ambitious candidate for U.S. Senate Kamala Harris could also escape investigation by this administration for violating federal law. However, Congress and the next administration do appear to have grounds to question Ms. Harris about these matters, and take a hard look into whether she and her office are engaged in criminal violations of the federal tax code.

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April 8, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Thursday, April 7, 2016

The IRS Scandal, Day 1064

IRS Logo 2 Washington Free Beacon, IRS Denied Tax-Exempt Status to 57 Religious Groups in 2015; 5,681 Applications Left in Limbo:

The IRS denied tax-exempt status to 57 religious or charitable groups in 2015, according to recent data from agency.

The IRS rejected a total of 67 applications for tax-exempt status in 2015, and religious groups comprised the majority of denials. There were 92,653 total applications by religious and charitable groups in 2015. Of those applications, 86,915 were approved, 57 were denied, and 5,681 were left in limbo.

Attorney Jordan Sekulow, executive director of the American Center for Law and Justice, represents a number of conservative and pro-life non-profit organizations that have faced long battles to have their tax-exempt status approved by the IRS. Among his clients, two are still awaiting determination by the IRS—one group has been waiting for more than six years, and another for nearly six years. “The process is supposed to be a fairly quick process,” says Sekulow. “If the IRS needs more information, they’re supposed to ask you for that.” ...

Sekulow isn’t persuaded that the IRS is being open about the process. “The IRS was wrong then and while the agency says it has stopped such discriminatory action, there’s really nothing that leads us to believe that this administration has really changed,” he continued.

Sekulow is taking his clients’ cases to the D.C. Circuit Court of Appeals next week to challenge the IRS’ targeting of conservative groups. Many of the groups he represents that have gotten approval have had to put up with demands by the IRS for Internet passwords and usernames, donor lists, and charitable activities of family members.

Sekulow also stressed that the waiting period these groups have to go through can be as destructive as being denied tax-exempt status. “The IRS is playing the ‘delay game’—keeping these organizations guessing about the status of their applications and ultimately whether their applications will be approved,” said Sekulow. “I think that keeping people hanging in the balance can be as destructive as an outright denial because lengthy delays can stop the momentum that many of these start-up groups experienced. Lengthy delays may not only sap the momentum of a group, it produces a chilling effect on the constitutionally protected speech,” he said.

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April 7, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Wednesday, April 6, 2016

IRS Headquarters Building In Washington, D.C. To Remain Closed For Rest Of The Week Due To Fire

IRS BuildingFollowing up on yesterday's post, IRS Building In Washington, D.C. Closed Today Due To Fire:  Washington Post, IRS HQ to Remain Closed for Repairs for the Rest of the Week:

The headquarters of the Internal Revenue Service, near the Mall in Northwest Washington, will remain closed for the rest of the week after a fire there Monday forced evacuation of the building.

The IRS said Tuesday that the fire in the basement of the building on Constitution Avenue affected the heating/ventilation/air conditioning system. “We are working to restore service as soon as possible,” the IRS said in a statement.

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April 6, 2016 in IRS News, Tax | Permalink | Comments (2)

The IRS Scandal, Day 1063

IRS Logo 2 Wall Street Journal, What Does the Stonewall Cost Anyone at the IRS?:

Regarding your editorial “Chipping Away at the IRS Stonewall” (March 24): Why wouldn’t the IRS continue to stonewall? What recourse is there for the plaintiffs—or the rest of us? Can anyone at the IRS be held personally liable? If not, how does a citizenry directly punish a misbehaving federal agency? It seems to me that the IRS has nothing to lose by doing nothing, and that’s a profoundly helpless feeling.

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April 6, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Tuesday, April 5, 2016

Treasury Department Issues Third Batch Of Anti-Inversion Rules, Updated Framework For Business Tax Reform

IRS Building In Washington, D.C. Closed Today Due To Fire

IRS BuildingNPR, Fire Closes IRS Headquarters But Won't Affect Tax Return Processing:

A small fire forced the evacuation of the IRS headquarters in Washington, D.C., on Monday.

Spokesman Terry Lemons told The Associated Press that the fire started in the basement around 3:30 p.m., and created a lot of smoke — forcing the building to be evacuated. The Washington Post reports:

The building closed about 2:45 p.m. Monday, before the fire started, "due to electrical issues with the air-conditioning system," an IRS spokesman said. He said that about 2,000 people work there and that "a few hundred" were still in the building when the fire broke out.

There were no injuries and the cause is being investigated.

The building will be closed on Tuesday because it doesn't have full electricity.

The fire will not affect processing of tax returns, which is done elsewhere, officials told The Washington Post.

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April 5, 2016 in IRS News, Tax | Permalink | Comments (2)

The IRS Scandal, Day 1062

IRS Logo 2 One News Now, Media on IRS Scandal: 'We Know Nothing!':

There have been new developments in the IRS targeting scandal but if you watch the news on ABC, CBS or NBC, good luck hearing about it.

That's because it's been more than 500 days since the broadcast news networks covered the scandal.

According to a new study by Geoff Dickens, deputy research director at the Media Research Center, CBS and NBC last reported on the targeting of conservative groups by the IRS in October of 2014. ABC lagged way behind last covering it in May of that year, nearly 700 days ago.

"This is clearly abuse of power and they've stopped covering it," Dickens says of the networks.

Dickens points out that just last week a federal appeals court scolded the agency and ordered it to turn over a secret list of conservative groups they targeted so a class action suit could move forward. ... [T]here was no mention on the so-called "Big Three" networks.

Also unreported in recent months, Dickens notes, is the Justice Department ending its investigation without any criminal charges filed against Lois Lerner, whose emails show she called Republicans "evil and dishonest."

There was not even a news story – slanted or otherwise – when the U.S. House began procedures to impeach IRS Commissioner John Koskinen.

"It's really stunning," observes Dickens, who says the IRS scandal is worse than the Watergate scandal under Richard Nixon.

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April 5, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Monday, April 4, 2016

The IRS Scandal, Day 1061

IRS Logo 2 Nevada Las Vegas Review-Journal editorial,  IRS Foot-Dragging:

As Pepperdine University law professor and TaxProf Blog editor Paul Caron has been dutifully documenting, it has now been more than 1,050 days since word of a scandal broke involving the IRS’s systematic delaying and denying of nonprofit status to conservative political groups, in order to diminish their influence on the 2012 election.

In 2013, a conservative group called the NorCal Tea Party Patriots filed a class action lawsuit against the agency, requesting access to files the IRS kept on the targeted groups. The agency refused to hand them over and the Justice Department stonewalled on its investigation, arguing that the files are protected by Section 6103 of the U.S. code, which was intended to assure taxpayers that their returns would remain confidential.

But as the Wall Street Journal reported, while the IRS has repeatedly dragged its feet in responding to the request — and the media has pretty much buried the story — the Sixth Circuit Court of Appeals thankfully tore into the agency’s obstructionist conduct last week, ruling that the IRS must turn over spreadsheets it created on the targeted groups. Judge Raymond Kethledge, writing on behalf of a unanimous three-judge panel, called the allegations against the IRS “substantial” and “among the most serious allegations a federal court can address.”

“The district court ordered production of those lists, and did so again over an IRS motion to reconsider,” he wrote. “Yet, almost a year later, the IRS still has not complied with the court’s orders.” ...

The IRS hiding behind taxpayer privacy concerns is ridiculous, and the Sixth Circuit should be applauded for its ruling. These conservative groups in question don’t mind if their information becomes public, and, in fact, the spreadsheets could be the linchpin to their case, proving the IRS was intentionally and illegally targeting groups based on their political beliefs.

As we’ve mentioned before, it’s important to remember why this scandal matters so much in the first place. This isn’t just executive branch employees running roughshod over Americans’ rights, which already happens too often to begin with. No, this is about our nation’s federal tax collection agency using taxpayer resources and its considerable powers to actively influence the outcome of national elections.

The IRS needs to meet that seven-day deadline — that’s this week — with no excuses, and with every piece of documentation the Sixth Circuit mandated. The Department of Justice also needs to move its investigation forward and hold the IRS accountable for its actions.

Furthermore, this issue is one among many proving that the IRS’s reach is far too extensive, to the point of being partisan, and that the tax code is far too onerous for American citizens. The Republican-led Congress needs to pass a massive tax reform bill and put it on the president’s desk.

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April 4, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Sunday, April 3, 2016

The IRS Scandal, Day 1060

IRS Logo 2Stuart Bassin (Bassin Law Firm, Washington, D.C.; former Senior Litigation Counsel, U.S. Department of Justice Tax Division), Sixth Circuit Requires IRS to Disclose Return Information of Non-Parties in Tea Party Exempt Organization Litigation:

Last week, the Sixth Circuit rejected a government mandamus petition seeking to overturn a trial court discovery order requiring the Service to disclose the names of non-party organizations whose applications for tax exempt status were allegedly treated improperly because of the organization’s political views. In re United States; United States v. NorCal Tea Party Patriots, Case No. 15-3793 (March 22, 2016).

The underlying case arose out of allegations that the Service discriminated against conservative organizations in reviewing applications for tax-exempt status.  According to the plaintiffs, the Service gave increased scrutiny to some organizations in reviewing their applications and, in some cases, requested additional and unnecessary information from the applicants to delay review of their applications.  Substantively, the plaintiffs’ legal claims assert violations of the First Amendment and the Section 6103 prohibition against disclosure of taxpayer return information.  Earlier this year, the trial court certified the case as a class action, a development I discussed in an earlier post in Procedurally Taxing.

The dispute before the Court of Appeals involved a discovery order issued by the trial court requiring the Service to identify other taxpayers whose applications for exempt status received comparable scrutiny–information the taxpayers sought in hopes of identifying additional class action plaintiffs. The Service resisted, contending that the disclosure was barred by Section 6103. The district court, expressing exasperation with the Service’s interference with the case’s development, ordered production of the information, ruling that disclosure was authorized under Section 6103(h)(4)(B) because the information was reflected in a return “directly related to the resolution of an issue” in litigation. The Government then filed its petition for writ of mandamus.

The Court of Appeals ultimately affirmed the order allowing the discovery, taking several opportunities to criticize the Service’s actions and the Justice Department’s advocacy. ... [T]he tone of the opinion should be of great concern to the Government. Both the appellate panel and the trial court have made clear their impatience with, and distaste for, the Government’s procedural challenges to the taxpayer’s claims. Every indication is that the courts are willing to rule against the Government if the taxpayers’ assertions of disparate treatment are proven at trial, although it will be interesting to see what remedy will be allowed. The Government can continue fighting, but that seems to be an uphill battle and a battle which may produce further precedent that the Service will not like.

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April 3, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Saturday, April 2, 2016

The IRS Scandal, Day 1059

IRS Logo 2Politico, IRS v. House Republicans, Cont'd

There are several interesting nuggets in this WSJ piece about the continuing challenges the IRS faces, from the increasingly prevalent cybercrimes to the more mundane — like an aging workforce and an only temporary uptick in phone calls answered.

First, there’s no letup in the showdown between GOP lawmakers and the IRS commissioner they want to impeach, John Koskinen. House Oversight Chairman Jason Chaffetz (R-Utah): “He’s earned no friends up here on Capitol Hill, because they haven’t solved the problems of targeting conservatives based on their political beliefs.” Koskinen: “I would challenge anybody to find any targeting of conservatives going on at this point.”

Wall Street Journal, Wait Times Are Down, But IRS Still Faces Serious Challenges:

[I]n 2013, the IRS disclosed it had given extra scrutiny to Tea Party groups seeking tax-exempt status. That revelation started a purge at the top levels of the agency and years of investigations.

A Senate report in 2015 found that IRS officials were “delinquent” in their treatment of Tea Party and other groups, resulting in heightened and inappropriate scrutiny, but Republicans and Democrats disagreed on whether IRS officials were motivated by their own political views.

House Republicans remain unsatisfied. They have turned their ire toward Mr. Koskinen because of the agency’s travails and contradictory statements as it tried to retrieve records for the investigations, such as the emails of Lois Lerner, former director of tax-exempt organizations at the IRS.

Rep. Jason Chaffetz (R., Utah), who sponsored an impeachment resolution against Mr. Koskinen that has more than 60 co-sponsors, said the IRS has bloated management and has failed to update aging technology.

“John Koskinen was hired to come clean up the mess and he made it worse, not better,” said Mr. Chaffetz, who is chairman of the House Oversight and Government Reform Committee. “And he’s earned no friends up here on Capitol Hill, because they haven’t solved the problems of targeting conservatives based on their political beliefs.”

Mr. Koskinen on Thursday said the agency has implemented recommendations from its inspector general and the Senate Finance Committee, and that he has tried to build an ethos in the IRS that encourages employees to report problems and get them addressed quickly.

“I would challenge anybody to find any targeting of conservatives going on at this point,” he said, without saying “targeting” had happened before he started. “There have been significant changes and improvements, and I’m confident that that kind of situation isn’t going to happen again.”

So far, the impeachment effort hasn’t advanced and Republicans and Mr. Koskinen seem stuck with each other. His term expires in November 2017, and the next president will choose his successor.

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April 2, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Friday, April 1, 2016

New Form W-K9: Individual Pet Tax Return

The IRS Scandal, Day 1058

IRS Logo 2WisconsinWatchdog.com, John Doe Freedom Fighter Wins Big Victory Against the IRS:

The conservative activist who took on Wisconsin’s abusive John Doe investigation and won has been engaged in a similar epic struggle against the IRS.

Eric O’Keefe, director of Wisconsin Club for Growth, also serves as chairman of the board for Citizens for Self-Governance, the limited-government organization that is financially backing a class-action lawsuit by hundreds of tea party groups against the Internal Revenue Service.

The litigation alleges the Obama administration’s IRS targeted conservative groups for additional scrutiny, mainly under the regime of Lois Lerner, director of the IRS’s Exempt Organizations Unit.

Last week, more than 1,000 days after the lawsuit was filed, a three-judge panel of the Cincinnati-based 6th U.S. Circuit Court of Appeals, having lost patience with the government’s foot-dragging, ordered the IRS to turn over details on tax-exempt applicants. The IRS was given seven days to comply.

An attorney for the plaintiffs tells Wisconsin Watchdog that the IRS on Tuesday delivered a “large production” of documents and the law firm is now reviewing the materials. “We’re very pleased to have it. There is a lot of information in native file format,” said Eddie Greim, attorney for Graves Garrett LLC. “We hope to piece it all together and understand how the targeting scheme unfolded over time.” ...

[T]here were some eerie connections between the Wisconsin John Doe and the IRS initiative uncovered along the way.

“It was much like the John Doe spying operation,” O’Keefe said. “The department was overseen by Lois Lerner, a radical left-winger who met (GAB director) Kevin Kennedy when she worked at the FEC, the national speech regulator.”

As Wisconsin Watchdog’s investigation, Wisconsin’s Secret War, detailed, Lerner and Kennedy were close friends. Kennedy consulted with Lerner about the John Doe probe and asked how the IRS might get involved, according to emails obtained by Wisconsin Watchdog.

“This is a part of the national left attack using state power to stifle the political activities of patriotic Americans,” O’Keefe said of the IRS’ initiative. “It’s a horrendous abuse and they are using tactics with us similar to the ones that got them in trouble in the first place. They’re stonewalling, they’re not following the rules, and it leads us to believe that what they have is worse than what I suspect.”

A trial date is set for August 2017. “Believe it or not, that’s actually pretty fast for a federal court,” Greim said.

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April 1, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Thursday, March 31, 2016

IRS Releases FY 2015 Data Book

IRS Data BookIR-2016-52 (Mar. 30, 2016), IRS Releases FY 2015 Data Book:

The Internal Revenue Service today released the 2015 IRS Data Book [individual tables], a snapshot of agency activities for the fiscal year.

The 2015 Data Book describes activities conducted by the IRS from Oct. 1, 2014, to Sept. 30, 2015 and includes information about returns filed, taxes collected, enforcement, taxpayer assistance and the IRS budget and workforce, among others. This edition also contains charts that show trends, such as the decline in the number of audits and the reduction in telephone and in-person tax assistance, but increases in the use of online resources and volunteer tax assistance.

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March 31, 2016 in IRS News, Tax | Permalink | Comments (0)

The IRS Scandal, Day 1057

IRS Logo 2Waterbury Republican-American editorial, Barack H. Nixon:

Infamously, President Obama‘s Internal Revenue Service harassed conservative groups that applied for tax-exempt status between 2010 and 2012. As we noted in a number of editorials, most news-media organizations – aside from those with conservative leanings – demonstrated little interest in what some have dubbed “IRSgate.” We deemed this an outrageous dereliction of duty. It is clear the harassment was systemic, and American democracy cannot exist under a partisan and/or ideological tax agency.

The vindictiveness of the Obama IRS reminds one of Richard Nixon‘s notorious administration. Of course, Mr. Nixon largely was unsuccessful in siccing the tax agency on his political opponents. Three IRS commissioners – Randolph W. Thrower, Johnnie Mac Walters and Donald C. Alexander – resisted his dark plans.

To our pleasant surprise, the most recent “IRSgate” development has received some coverage from non-conservative news agencies. A three-judge panel from the Cincinnati-based U.S. Court of Appeals for the Sixth Circuit has unanimously ruled that the IRS must release a list of targeted conservative groups. This will allow a cadre of groups, led by NorCal Patriots, to proceed with a lawsuit against the IRS. Judges Raymond Kethledge, David McKeague and Damon Keith upheld a ruling issued nearly a year ago by U.S. District Court Judge Susan J. Dlott. ...

Hopefully, the coverage afforded thus far simply is the tip of the iceberg. Americans of all political persuasions deserve to know the full story of the IRS’ sleaziness and the victims’ efforts to seek justice. If mere scheming to politicize the IRS was enough for the House Judiciary Committee to approve an article of impeachment against Mr. Nixon in 1974, the actual weaponization of the tax agency at least warrants a substantial amount of news-media coverage.

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March 31, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Wednesday, March 30, 2016

The IRS Scandal, Day 1056

Microsoft IRSFollowing up on my previous posts on the IRS's claim that it had erased the hard drive of its director of transfer pricing operations despite a court order to preserve all documents concerning the IRS's hiring of an elite law firm to assist its audit of Microsoft (The IRS Scandal, Days 987, 989, 994, 1002):

Statement of U.S. Department of Justice Trial Attorneys, Microsoft v. IRS, Nos. 2:15-cv-00369, 00850 (D.C. W.D. Wa. Mar. 25, 2016) (record citations omitted):

On January 15, 2016, the Department of Justice, Tax Division, notified the Court that the Internal Revenue Service (“IRS”) had reported that it inadvertently had not captured a computer hard drive used by one agreed-upon custodian, Samuel Maruca, and that the hard drive had been sanitized. Since then, there have been two developments regarding Mr. Maruca’s hard drive. First, the IRS continued to look for responsive records, and in doing so 19 it located potentially responsive user-generated content that had been previously on Mr. Maruca’s hard drive and saved elsewhere in July, 2014, only several weeks before Mr. Maruca separated from the IRS. The Department of Justice disclosed this source of potentially responsive  documents to Microsoft’s counsel on February 11, 2016.

Second, during discussions on and from March 14 through March 23, 2016, IRS Chief Counsel attorneys notified the undersigned Department of Justice counsel that the IRS located a hard drive that appears to be Mr. Maruca’s hard drive. The IRS Chief Counsel attorneys believe that the hard drive has not been sanitized, the hard drive is in working condition, and the hard drive contains user-generated content. The IRS Chief Counsel attorneys informed Department of Justice counsel that they are presently processing the content for review and then will review the content for potentially responsive records. Non-exempt responsive records not already produced 10 to plaintiff will be produced as part of the on-going production by the IRS.

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March 30, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Tuesday, March 29, 2016

The IRS Scandal, Day 1055

IRS Logo 2National Review, Consequences Are for Schmucks:

People like Hillary Rodham Clinton do not go to jail without first becoming governor of Illinois or mayor of Detroit, and Herself always has her sights set on a higher office than those. But even relatively lowly players in her world escape jail time. Lois Lerner turned the Internal Revenue Service into a branch of the Obama campaign, using the agency’s fearsome investigatory powers to harass tea-party groups and conservative organizations. She’s enjoying a fat pension right now rather than the federal hospitality she so richly deserves. Kamala Harris, who is trying to do much the same thing with the office of the attorney general in California, probably is headed to the Senate. The Texas prosecutors who harassed Kay Bailey Hutchison, Tom DeLay, and Rick Perry for wholly imaginary crimes are in no danger of facing real recriminations.

(Hat Tip: Mark Fitzgibbons.)

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March 29, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Monday, March 28, 2016

The Odds Of An IRS Tax Audit

The Motley Fool, Here Are the Odds of an IRS Tax Audit:

The IRS publishes an annual Data Book that shows how many returns were filed, and how many returns received additional scrutiny. With this information, we can roughly quantify your odds that the IRS audits your 2015 tax returns. ...

IRS Audit Index

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March 28, 2016 in IRS News, Tax | Permalink | Comments (0)

The IRS Scandal, Day 1054

IRS Logo 2Investor's Business Daily editorial, It’s Past Time To End The IRS’ Reign Of Terror:

Corruption: A federal court has harshly judged the IRS for harassing conservative groups seeking tax-exempt status. We hope this brings far more trouble for the agency than it gave those groups.

Don’t think we’re downplaying what happened to these organizations. The IRS committed a serious offense. Its conduct was beyond outrageous. It held up nonprofit-status applications from Tea Party and conservative groups for political reasons, singled out the groups for unforgiving scrutiny and was actively looking for right-of-center organizations to grind in its 21st century inquisition.

On Tuesday, the 6th U.S. Circuit Court of Appeals censured the IRS, ordering it to turn over the list of groups it had targeted so that a class-action lawsuit filed by the NorCal Tea Party Patriots against the tax collector can move forward with those groups as plaintiffs. An agency that has long acted above the law has now been told it is accountable. This is significant.

The three-judge panel was not sparing in its judgment. It noted that “among the most serious allegations a federal court can address are that an executive agency has targeted citizens for mistreatment based on their political views.” It also told the IRS lawyers that they had conducted themselves in a manner unworthy of the government’s tradition of impartiality and decency as they fought the lawsuit. ...

How can such an agency exist in a free society? But then, we’re not truly free if the IRS or any other agent of the government has the latitude to carry on as the IRS has for decades. Free people don’t live in constant fear of a government inquiry and are not perpetually afraid that the tax collector’s boot will suddenly land on their neck. Nor are they ever anxious that an innocent slip-up will wreck their lives.

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March 28, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Sunday, March 27, 2016

The IRS Scandal, Day 1053

IRS Logo 2News Busters, It’s Been 513 Days Since Any Big 3 Network Has Touched the IRS Scandal:

The latest stunning development in the IRS targeting scandal, that a federal appeals court on Tuesday scolded the IRS for failing to turn over its full list of groups it targeted, has yet to be reported on any of the Big Three (ABC, CBS, NBC) network evening or morning shows.

However, as NewsBusters’ Scott Whitlock reported, all three networks on Thursday found time to gush over Barack Obama’s “fancy footwork” and “dancing diplomacy” in Argentina.

In fact, it’s been 513 days since any network has touched the IRS scandal. The last mention arrived on the October 28, 2014 edition of CBS This Morning when John Dickerson noted voters in states that would decide control of the Senate in the 2014 midterms were skeptical of the government due to a “series of different things from the Secret Service to Ebola to the IRS scandal.”

The last time NBC noted the IRS scandal was 540 days ago on the October 5, 2014 Today show, when NBC’s Meet the Press host Chuck Todd briefly noted that public skepticism about the government’s handling of the Ebola crisis was well-earned due to “Secret Service blunders, IRS losing e-mails, the Veteran Affairs Administration botching all these wait times.” 

But that’s nothing compared to the IRS scandal news drought on ABC. The last time the IRS targeting imbroglio got any airtime on ABC was 686 days ago in a 16 second brief by Amy Robach on the May 8, 2014 edition of Good Morning America, when Robach reported that “six Democrats have joined Republicans in the House” to hold Lerner in contempt of Congress. ...

Since then there have been multiple revelations gone unreported by the networks ...

Of course, Fox News did the reporting the networks refuse to do on the latest IRS scandal development.

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March 27, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (6)

Saturday, March 26, 2016

Why The IRS's Technology Nightmare Is Far From Over

FortuneFortune, Why the IRS's Technology Nightmare Is Far From Over:

This is a story about the Internal Revenue Service, an 84,000-employee government agency with a job that’s as vital as it is hard to love—securing the trillions of dollars in taxes that make the government run. And these days, it’s an agency down on its luck: plagued by angry politicians, frustrated taxpayers, hordes of identity thieves, and—more recently—hackers.

The IRS’s latest and perhaps most spectacular foray into disaster was an online feature called Get Transcript. The tool, which for the first time allowed taxpayers to download their records directly from IRS.gov, was supposed to be the happy ending to the decades-long struggle to bring the IRS’s J.F.K.-era legacy technology into the Internet age. But in February the bureau announced that hackers had used Get Transcript to steal the personal information of 724,000 people. The hack, it turned out, was six times as damaging as the IRS initially thought when it detected the breach and shut down the tool last May.

Also in February, another attack used 101,000 stolen Social Security numbers to fraudulently generate PINs for electronic filing of tax returns. No IRS data were exposed, but in the wake of that scare the agency disabled another online tool with which certain taxpayers could retrieve a separate PIN they had been assigned for identity protection purposes.

The episodes illustrate the immense technological challenges facing the agency, which—even as annual tax receipts have risen to more than $3 trillion—still uses half-century-old magnetic tape to store and process tax return records, as well as versions of Windows so old that Microsoft abandoned upkeep for them years ago....

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March 26, 2016 in IRS News, Tax | Permalink | Comments (2)

The IRS Scandal, Day 1052

IRS Logo 2Peter J. Reilly (Forbes), Sixth Circuit Looking To Protect Taxpayers From IRS Not IRS From Taxpayers:

Day 1049 of the IRS Scandal is the first day in a while with a real development. In the NorCal Tea Party Patriots litigation the IRS has really gotten slapped around by the Sixth Circuit for its dilatory conduct in long running litigation. The decision starts out by reiterating the preferred right wing narrative of the interminable never ending scandal. ...

At issue in this particular decision are lists of organizations flagged of special attention using “Be On the Lookout” criteria and two spreadsheets that the IRS provided to the Inspector General.  The reason the plaintiffs want the lists is to identify the members of their “class” in the putative class action suit.  The IRS has been refusing to turn over the lists arguing that they are “return information.” ...

As with any decision against the IRS in the interminable scandal, there is a good bit of coverage of the decision. I won’t try to duplicate the TaxProf and instead will refer you to Day 1049, Day 1050 and Day 1051.

The best discussion I have seen is on Paul Streckfus’s EO Tax Journal, which is not free. There are two main narratives of the scandal.  The one embraced by those who continue to pay attention is that there was a deliberately orchestrated conspiracy to impede the work of conservative groups.  The other is that the IRS has certain bureaucratic limitations in its ability to handle competing priorities and that the Tea Party applications created a perfect storm to bring out the worst in the Service .  Fundamentally the IRS can do some discreet things very well, but when you want it to walk and chew gum at the same time, things are less good.  Throw in people outside with political agendas pushing in opposite directions and the chance of paralysis is high.

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March 26, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Friday, March 25, 2016

Snakes On A Plane Or The IRS: Which Scares You More?

SnakesIRS2Washington Post, Snakes on a Plane or the IRS: Which Scares You More?:

I often talk to people who have been audited by the IRS and are now suffering the financial consequences. They owe tens of thousands of dollars and are digging their way out one monthly payment at a time.

So it was with great interest that I read a story by NerdWallet’s Liz Weston about how fewer people are scared of the IRS. Only 11 percent of survey participants in a NerdWallet poll are scared of being audited by the IRS. But one-third of those polled are afraid of reptiles, and 8.5 percent fear nonexistent zombies.

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March 25, 2016 in IRS News, Tax | Permalink | Comments (0)

The IRS Scandal, Day 1051

IRS Logo 2Wall Street Journal, Appeals Court in Tea Party Case Puts Nick in Taxpayer Privacy Law:

Attempts to extract information out of the IRS usually run into a solid wall: Section 6103, the part of the tax code setting taxpayer privacy rules. It keeps Donald Trump’s tax returns—and everyone else’s—outside the scope of the federal Freedom of Information Act.

The Sixth U.S. Circuit Court of Appeals in Cincinnati just put a tiny but important dent in that wall, at least in the states covered by that appeals circuit. The IRS office that handles tax-exempt applications is in Cincinnati.

In an appeals court ruling noticed mostly for its rhetorical blasts at the Internal Revenue Service, Judge Raymond Kethledge, writing for a three-judge panel, said the privacy rules that protect “return information” don’t apply to the names and addresses of groups seeking tax-exempt status.

The law “does not entitle the IRS to keep secret (in the name of ‘taxpayer privacy,’ no less) every internal IRS document that reveals IRS mistreatment of a taxpayer or applicant organization—in this case or future ones,” Judge Kethledge wrote Tuesday. “Section 6103 was enacted to protect taxpayers from the IRS, not the IRS from taxpayers.”

Until the ruling, the government, Congress and tax lawyers all operated under the assumption that tax-exempt groups’ names only become public if approved by the IRS. The IRS releases redacted letters denying tax-exempt status, while the names of groups that apply and withdraw–often after questions from the IRS–never become public.

“6103 is usually interpreted pretty broadly by the courts, with a lot of deference from the courts to the IRS,” said Lloyd Hitoshi Mayer, a tax law professor at the University of Notre Dame. “This is a significant change.” ...

George Yin, former chief of staff of the congressional Joint Committee on Taxation, said he was sympathetic to the policy view encapsulated in the court’s ruling. But Mr. Yin, now a law professor at the University of Virginia, said internal IRS processing of applications is covered by the privacy law. “The other Circuits that have looked at this issue are correct,” Mr. Yin wrote in an e-mail, “but the 6th Circuit was not.”

The Hill, IRS Commissioner: Court Ruling Raises Privacy Concerns for Taxpayers:

IRS Commissioner John Koskinen is warning that an appeals court ruling in the agency’s political-targeting scandal could put taxpayers’ privacy at risk.

"If suddenly, your name on an application and your address is available to the public, I think it’s going to … raise a concern by a lot of taxpayers who may not want anyone else to know what they’re applying for,” Koskinen told reporters Thursday, after delivering a speech at the National Press Club.

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March 25, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (8)

Thursday, March 24, 2016

IRS Auditing Of Big Corporations Plummets

TRAC/IRS, IRS Auditing of Big Corporations Plummets: Potential Annual Revenue Loss $15 Billion:

Very timely enforcement information obtained from the Internal Revenue Service show that total revenue agent audit hours aimed at larger corporations — those with $250 million or more in assets — dropped by more than one third (34%) from FY 2010 to FY 2015.

Figure 1

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March 24, 2016 in IRS News, Tax | Permalink | Comments (2)

The IRS Scandal, Day 1050

IRS Logo 2Wall Street Journal editorial, Chipping Away at the IRS Stonewall: A Federal Court Scores the Agency For its ‘Continuous Resistance’;

The media have ignored the IRS targeting of conservative groups, but the courts haven’t. On Tuesday the Sixth Circuit Court of Appeals tore into the agency’s obstructionist conduct and ruled that the IRS must turn over the spreadsheets it created on the targeted groups. ...

Writing for a unanimous three-judge panel, Judge Raymond Kethledge ... and excoriated the IRS for stonewalling during discovery. Charges that an executive agency targeted citizens for their political views are “among the most serious allegations a federal court can address,” he writes. In this case, he added, they are “substantial” and based on a report by the Treasury Inspector General for Tax Administration.

Equally appalling is the agency’s effort to obstruct the legal process. “[I]n this lawsuit the IRS has only compounded the conduct that gave rise to it,” Judge Kethledge wrote, calling the IRS response “one of continuous resistance.” He added: “The district court ordered production of those lists, and did so again over an IRS motion to reconsider. Yet, almost a year later, the IRS still has not complied with the court’s orders.”

Readers may remember that last autumn District Court Judge Susan Dlott said her “impression is the government probably did something wrong in this case.” Determining liability is a legal question, she continued, but “the government is doing everything it possibly can to make this as complicated as it possibly can, to last as long as it possibly can, so that by the time there is a result, nobody is going to care except the plaintiffs.” ...

Unless it appeals to the Supreme Court, the IRS now has seven days to turn over the lists to the law firm representing the tax-exempt groups, Graves Garrett in Kansas City. Perhaps we’ll now see what the IRS and Justice Department have worked so hard to hide.

Wall Street Journal, IRS Chutzpah: Taxpayer-Protection Laws Won’t Shield Abuse of Power:

Will federal employees who support President Obama ever be held accountable for hijacking the Internal Revenue Service and using it to assist Obama’s re-election bid? Thanks to a ruling yesterday from the Sixth U.S. Circuit Court of appeals, it’s possible the answer is yes.

The Washington Times’s Stephen Dinan sums up the finding: “A federal appeals court spanked the IRS Tuesday, saying it has taken laws designed to protect taxpayers from the government and turned them on their head, using them to try to protect the tax agency from the very tea party groups it targeted.” ...

“The IRS’s response has been one of continuous resistance,” Judge Kethledge observes. “For example, the IRS asserted that the names of IRS employees who worked on the groups’ applications were taxpayer ‘return information’ protected from disclosure by § 6103.” That is, the IRS attempted to invoke a law designed to protect taxpayers’ privacy to shield the identities of agency employees, who are supposed to work for the taxpayer. ...

In 1972 the IRS itself had more integrity than the White House. As we noted in 2014, then-Commissioner Johnnie Walters ignored an order from White House aide John Dean to target 200 of Nixon’s political enemies. “If I did what you asked, it’d make Watergate look like a Sunday school picnic,” Walters told Dean.

Under Obama, the IRS itself appears to have taken the initiative to target political opponents of the president—and not just powerful enemies, but ordinary Americans seeking to organize lawfully to further their views.

Washington Post, Obama Administration’s ‘Continuous Resistance’ in IRS Targeting Case Slammed by Federal Appeals Court:

A federal appeals court Tuesday slammed the Internal Revenue Service for what it called three years of “continuous resistance” to turning over documents in connection with a class-action suit brought by tea party groups singled out for months of delays, excessive paperwork and scrutiny as they sought tax-exempt status in 2010.

A unanimous ruling by a three-judge panel of the Cincinnati-based U.S. Court of Appeals for the 6th Circuit found that the IRS, in its unresponsiveness to the charges, “has only compounded the conduct that gave rise” to them. ...

The unusually severe tongue-lashing by the appellate judges followed a similar rebuke of the government in the unrelated but even more sensitive case involving a Freedom of Information Act request by Judicial Watch, a conservative group, involving former secretary of state Hillary Clinton’s personal email system.

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March 24, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Wednesday, March 23, 2016

IRS Scandal, Day 1049:  6th Circuit Slams IRS Treatment Of Tea Party Group

IRS Logo 2United States v. NorCal Tea Party Patiots, No. 15-3793 (6th Cir. Mar. 22, 2016)

Among the most serious allegations a federal court can address are that an Executive agency has targeted

Yet in this lawsuit the IRS has only compounded the conduct that gave rise to it. The plaintiffs seek damages on behalf of themselves and other groups whose applications the IRS treated in the manner described by the Inspector General. The lawsuit has progressed as slowly as the underlying applications themselves: at every turn the IRS has resisted the plaintiffs’ requests for information regarding the IRS’s treatment of the plaintiff class, eventually to the open frustration of the district court. At issue here are IRS “Be On the Lookout” lists of organizations allegedly targeted for unfavorable treatment because of their political beliefs. Those organizations in turn make up the plaintiff class. The district court ordered production of those lists, and did so again over an IRS motion to reconsider. Yet, almost a year later, the IRS still has not complied with the court’s orders. Instead the IRS now seeks from this court a writ of mandamus, an extraordinary remedy reserved to correct only the clearest abuses of power by a district court. We deny the petition.

Citizens for mistreatment based on their political views. No citizen—Republican or Democrat, socialist or libertarian—should be targeted or even have to fear being targeted on those grounds. Yet those are the grounds on which the plaintiffs allege they were mistreated by the IRS here. The allegations are substantial: most are drawn from findings made by the Treasury Department’s own Inspector General for Tax Administration. Those findings include that the IRS used political criteria to round up applications for tax-exempt status filed by so-called tea-party groups; that the IRS often took four times as long to process tea-party applications as other applications; and that the IRS served tea-party applicants with crushing demands for what the Inspector General called “unnecessary information.” ...

In closing, we echo the district court’s observations about this case. The lawyers in the Department of Justice have a long and storied tradition of defending the nation’s interests and enforcing its laws—all of them, not just selective ones—in a manner worthy of the Department’s name. The conduct of the IRS’s attorneys in the district court falls outside that tradition. We expect that the IRS will do better going forward. And we order that the IRS comply with the district court’s discovery orders of April 1 and June 16, 2015—without redactions, and without further delay.  

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March 23, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

Tuesday, March 22, 2016

IRS Issues Tax Design Crowdsourcing Challenge

IRSIRS, Tax Design Challenge (more here):

Reimagine the Taxpayer Experience of the Future
Taxpayers have the right to be informed, which includes access to their personal taxpayer data. Many taxpayers, however, might not know where to find this information or how to use it, as much of this information reads like a receipt and can be hard to understand for those who are not finance professionals.

The goal of this challenge is to reimagine the taxpayer experience and design the taxpayer experience of the future. With over 200 data fields at play, how might we design, organize, and present tax information in a way that makes it easier for taxpayers to manage their taxpayer responsibilities, and to use their own taxpayer data to make informed and effective decisions about their personal finances?

When: April 17, 2016, 11AM to 3PM. At this event, you’ll have the opportunity to:

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March 22, 2016 in IRS News, Tax | Permalink | Comments (0)

The IRS Scandal, Day 1048

IRS Logo 2Politico, Garland's Tax Record:

REMEMBER Z STREET? Close followers of the controversy surrounding the IRS’s improper scrutiny of tea party groups certainly do. But you might not know about Merrick Garland’s role in the case.

Garland, President Barack Obama’s Supreme Court pick, took the IRS to task and ruled for the conservative pro-Israel group in what our Toby Eckert called “the most notable tax case” Garland saw during his tenure at the U.S. Court of Appeals for the District of Columbia. The appeals court found last year that Z Street could proceed with a suit asserting that its tax-exempt application received more scrutiny and faced delays because the group didn’t agree with the Obama administration about Israel, in what conservative activists called an opening act to the IRS’s tea party controversy.

For his part, Garland spared no scorn with the IRS’s argument that it had a 270-day cushion protecting it from the suit. "You don't really mean that, right? Because the next couple words would be the IRS is free to discriminate on the basis of viewpoint, religion, race [for 270 days]. You don't actually think that?" Garland said, according to The Wall Street Journal. "Imagine the IRS announces today a policy that says as follows: No application by a Jewish group or an African-American group will be considered until one day short of the period under the statute."

The Times of Israel, Garland Previously Blasted IRS Over Case Against Pro-Israel Group:

Merrick Garland may be best known for his work on the Oklahoma City Bombing case, but last year he was one of three judges who blasted the US Internal Revenue Service for trying to squelch information about the Obama administration possibly discriminating against a far right pro-Israel group that was seeking tax exemption status.

The case came to Garland’s court of appeals after a lower court found the IRS could not have a case by Z Street, which was suing and claiming the IRS had discriminated based on the group’s point of view, thrown out.

IRS lawyer Theresa McLaughlin came to court trying to argue that one can’t sue over collection of taxes, but the judges threw it back, citing it was not the point of Z Street’s suit.

When the lawyer tried to argue that Z Street could wait 270 days and then sue, Garland became angry.

“Imagine the IRS announces today a policy that says as follows: No application by a Jewish group or an African-American group will be considered until one day short of the period under the statute… Is it your view that that cannot be challenged,” he said, according to the Wall Street Journal.

The Z Street case is still going on. If it reaches the Supreme Court, Garland may have a chance to rule on it again.

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March 22, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Monday, March 21, 2016

The IRS Scandal, Day 1047

IRS Logo 2USA Today op-ed:  How David Brooks Created Donald Trump, by Glenn Reynolds (Tennessee):

Last week, in assessing the rise of Donald Trump, New York Times columnist David Brooks engaged in an uncharacteristic bit of self-reflection. ... Brooks is, of course, horrified at Trump and his supporters, whom he finds childish, thuggish and contemptuous of the things that David Brooks likes about today’s America. It’s clear that he’d like a social/political revolution that was more refined, better-mannered, more focused on the Constitution and, well, more bourgeois as opposed to in-your-face and working class.

The thing is, we had that movement. It was the Tea Party movement. ... One of the most famous things about the Tea Partiers was that — as befits a relentlessly bourgeois protest movement — they left things cleaner than they found them. ...

Yet the tea party movement was smeared as racistdenounced as fascist, harassed with impunity by the IRS and generally treated with contempt by the political establishment — and by pundits like Brooks, who declared "I'm not a fan of this movement." After handing the GOP big legislative victories in 2010 and 2014, it was largely betrayed by the Republicans in Congress, who broke their promises to shrink government and block Obama’s initiatives.

So now we have Trump instead, who tells people to punch counterprotesters instead of picking up their trash.

When politeness and orderliness are met with contempt and betrayal, do not be surprised if the response is something less polite, and less orderly. Brooks closes his Trump column with Psalm 73, but a more appropriate verse is Hosea 8:7 "For they have sown the wind, and they shall reap the whirlwind.” Trump’s ascendance is a symptom of a colossal failure among America’s political leaders, of which Brooks’ mean-spirited insularity is only a tiny part. God help us all.

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March 21, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (4)

Sunday, March 20, 2016

The IRS Scandal, Day 1046

IRS Logo 2Forbes:  Obama Administration Learned From Lois, Dodging IRS Scandal, by Robert W. Wood:

Deny, stonewall, deny. For a time, the IRS scandal looked serious, enough for heads to roll. But with a dogmatic and unwavering narrative, the administration made it go away. It was aided by Lois Lerner’s refusal to testify, generous bonuses and pension. You have to hand it to the administration for pulling off a tour de force that could have brought a lesser administration down. Disagreeing with any of it can sound like being against recycling.

President Obama always fervently denied there was any IRS problem, not even a smidgen of corruption. Any missteps were innocent, entirely the fault of bonehead decisions in local IRS offices. On his final Daily Show appearance, the President capped his ‘no targeting’ mantra. There was no targeting. Emails show there was no directive about targeting. Sorry, it turns out some of our emails are missing? Well, hard drives crash. We recycle them–which helps the environment. Besides, liberals got targeted too. There’s no smidgen of corruption. Cash bonuses? Those are unrelated. And the latest in the long line of excuses: it was all the Republicans’ fault.

With all this unwavering devotion to mission, there could be no other conclusion. It was no surprise that the current Justice Department wrote a letter to members of Congress announcing that Lois Lerner will face no criminal charges. If you worried about the email’s sent from Ms. Lerner’s dog’s email account, don’t be, the dog is safe too. The most the DOJ would say was that there was mismanagement down at the IRS. Hey, perhaps some poor judgment, even institutional inertia, but that was it.

Stay on mission. It may have looked like targeting. But the DOJ said there was no evidence that any IRS official acted based on political, discriminatory, corrupt, or other inappropriate motives. Not even Ms. Lerner, despite her history, including at the Federal Election Commission, before she moved on to IRS targeting. Disparate impact on the tea party? That was just mishandling. 

Ms. Lerner was handsomely rewarded while she presided over alleged discrimination against conservative nonprofits. In fact, records revealed that she received $129,000 in bonuses between 2010 and 2013, averaging $43,000 a year—on top of her regular salary. Ms. Lerner came off as a kind of folk hero in the DOJ report, stepping forward to bring this whole issue up! The fact that Ms. Lerner planted and then answered her staged question made her a kind of whistleblower.

President Obama’s testy “not even a smidgen of corruption” remark to was convincing, despite the Government Accountability Office report that internal controls for exempt organization audit selection should be strengthened. The GAO said organizations can be picked for examination in an unfair manner, based on religious, educational, political, or other views. Inconveniently, IRS documents revealed Lois Lerner’s email warning IRS staffers of the pitfalls of revealing too much information to Congress. Forget email, use instant messaging system that automatically deletes. House Oversight Committee documentation suggests that IRS officials used it deliberately to evade public scrutiny. 

Ms. Lerner professed her innocence and then took the Fifth. When she broke her silence to Politico, she said she did nothing wrong, claiming she was the victim. Staying on mission was key, even though Ms. Lerner had met with the DOJ about prosecuting conservative groups. Former IRS Commissioner Shulman testified there was “absolutely no targeting” of conservative or Tea Party organizations. Ms. Lerner admitted targeting, calling it “absolutely incorrect, insensitive, and inappropriate.”

Four days later, on May 14, 2013, the Inspector General issued a report confirming the targeting. Ms. Lerner professed her innocence, then took the Fifth. She was placed on administrative leave, and shortly thereafter retired with full pension. The House held Ms. Lerner in contempt. Only then–on June 13, 2014, did the IRS first say it lost Lerner’s emails from 2009 to 2011, destroying hard drives and backups.

Eventually, the IRS said it spent millions to try to recover them. Republicans were repeatedly accused of wasting money on this, since the IRS was above reproach. The narrative saying the Republicans were just wasting money sure turned out to be right. There was no smidgen of corruption, after all.

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March 20, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

Saturday, March 19, 2016

The IRS Scandal, Day 1045

IRS Logo 2Forbes:  IRS And Liquor By The Wink, by Peter J. Reilly:

Groucho Marx is supposed to have sent a telegram to a club stating – “Please accept my resignation. I don’t want to belong to any club that will accept people like me as a member.”  That sentiment is not exactly a tax principle, but it is very akin to one.  The idea is that for an organization to be recognized as a social club exempt under 501(c)(7) belonging to it has to mean something, maybe not much, but something. That was the essence of Private Letter Ruling 201605021.  Private letter rulings are redacted, so I’m going to call “the club” – How Dry I Am (HDIA).

HDIA has some high sounding purposes in its Articles of Incorporation.  It is intended to provide for the social, cultural and civic betterment of its member, support charitable endeavors, provide for recreation and the like and establish and maintain facilities where all this good stuff can go on. That’s the Articles of Incorporation.  It advertises itself a little differently.

HDIA advertises itself as a family restaurant and bar and grill.  The facility is leased from two of its members.  It seems like a pretty convoluted way to run a restaurant, but there is a reason from it.  HDIA is in a dry county where restaurants are not allowed to serve liquor.  Private clubs are another matter.  They can serve liquor to members.  Thus the proliferation of private clubs in dry counties where liquor is served "by the wink." ... The IRS broke HDIA the bad news that it did not qualify as an exempt organization. ...

This little comedy may seem far removed from the interminable IRS scandal now on Day 1043 by TaxProf Count. We privilege not for profit organizations in a variety of ways, not just through federal tax benefits but also by letting them sell liquor, where other cannot, run gambling, or make significant political expenditures without disclosing donors.  There is even an entirely unmerited dose of credibility that organizations get for having achieved exempt status.

Yet we lay the regulation of entities seeking exemption from a variety of rules at the doorstep of our tax collection agency, even when the status has little or no tax significance as was the case with the 501(c)(4) organizations that made up the core scandal and this particular attempt at 501(c)(7) that just wants to serve liquor. ...

In a recent article in Tax Analysts – The IRS’s Multi-Mission Mismatch Problem – Kristin Hickman makes a strong argument for moving Exempt Organization regulation out of the IRS as part of a larger effort to focus it on its core competency.

IRS personnel have tremendous capacity to process and evaluate hundreds of millions of taxpayer filings and collect the taxes owed. But they are not typically social workers, environmental scientists, health policy experts, or First Amendment scholars. Consequently, however talented IRS employees may be at pursuing the IRS’s traditional revenue-raising mission, they may not be as good at addressing the needs of socioeconomically disadvantaged persons, promoting new sources of energy, remaking the healthcare system, or recognizing when administrative decisions implicate politically sensitive values like freedom of speech or religion.

Perhaps Congress could spin off exempt organization determinations and monitoring wholesale and have the responsible agency just provide the IRS with a list of approved entities. If the IRS suspects a problem with a particular entity, it could refer the matter back to the responsible agency.

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March 19, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)